Standing Committee A

[Mr. Win Griffiths in the Chair]

State Pension Credit Bill [Lords]

Clause 3 - Savings credit

Amendment proposed [this day]: No. 21, in page 3, line 7, at end insert— 
'(2A) The Secretary of State shall as soon as practicable after the end of the fiscal year 2004–05 and as soon as practicable after the end of each year thereafter lay before Parliament a report setting out— 
 (a) the number of persons with a withdrawal rate of 100 per cent. in respect of income beneath the savings credit threshold, and 
 (b) the total value of the income concerned.'.
 Question again proposed, That the amendment be made.

Win Griffiths: I remind the Committee that with this we are discussing amendment No. 5, in page 3, line 26, at end insert—
'(6A) Such regulations shall provide that, in the calculation of qualifying income, a claimant may substitute for his actual rate of retirement pension an amount equal to the rate of retirement pension that the claimant would have been entitled to if the provisions of paragraph 5(7) of Schedule 3 to the Contributions and Benefits Act (home responsibilities protection) had been in force since the claimant attained the age of 16.'.

Ian McCartney: I apologise for the absence of my hon. Friend the Under-Secretary of State; she is chaperoning my right hon. Friend the Secretary of State in the debate in the House this afternoon. She intends to return to participate in our discussions. I shall reply to the debate that my hon. Friend commenced. I hope that Committee members will be kind to me as I want to make sure that I do as good a job as she would do in response to the amendment. I shall probably take my time because several issues have been raised and I want to treat them with appropriate care
 The hon. Members for Hertsmere (Mr. Clappison) and for Northavon (Mr. Webb) are also not here this afternoon. I do not want to make cheap shots at Committee members when they are not here—not that I would ever do that—but I want to place on record the Government's response. It will give them an opportunity at a later date to see whether I have answered adequately the points that they raised. 
 I shall start with amendment No. 21. The proposal would safeguard the monitoring of the effect of pension credit only on a particular group of pensioners. While I wholeheartedly support the objective of monitoring, it is inconceivable that we would not want a wider view of the impact of pension credit on recipients. The amendment would promote parliamentary interest in only one group of pensioners. That would not serve the majority of pensioners or 
 fellow hon. Members who have constituents in a range of circumstances. 
 The amendment refers to the position of two groups of pensioners who will still face benefit withdrawal rates of 100 per cent. under pension credit—the 60 to 64-year-olds and those over 65 with total incomes below the savings credit threshold, who qualify for the guarantee credit only. A key objective of pension credit is, as far as is practicable, to reward those who have worked hard and saved. It is only right that a full state pension based on contributions and credits for those with broken work records and who had caring responsibilities should be the basis for state provision. For those reasons, we decided to set the start point of the savings credit at an amount that, at least initially, equates to the full basic state pension. Of course, pensioners with less than full pensions are still entitled to the full guaranteed amount of pension credit. 
 The important point for pensioners is the guaranteed income they will receive from pension credit, not the marginal deduction rate, which is largely irrelevant to them. They are unlikely to change their income, so there will be no question of the marginal deduction rate acting as a disincentive for them to save. It may be helpful to the Committee if I explain more about it. The cost of ensuring that no one faces a marginal deduction rate greater than 40 per cent. would be £17.5 billion. Under the current minimum income guarantee, 2.5 million pensioners face a taper of 100 per cent. That means that their benefit entitlement is reduced by £1 for every £1 of extra income received. 
 Following the introduction of pension credit, pensioners aged over 65 with incomes between the savings credit threshold and the guaranteed credit—between £77 and £100 for single pensioners and £123 and £154 for pensioner couples—will face a reduction in benefit entitlement of between 40p and £1 for every £1 of extra income, for example, a taper of 40 per cent., not 100 per cent. We estimate that the number of pensioners who face a 100 per cent. taper will be reduced to about 900,000. In addition, 700,000 fewer pensioners will face a 40 per cent. taper, and those on a 40 per cent. withdrawal rate could gain up to £13.80 a week if single or, in the case of a couple, £18.60. 
 Although the amendment does not involve interaction with housing benefit and council tax benefit, that has a bearing on what the hon. Member for Hertsmere said this morning. The 1.3 million pensioners entitled only to savings credit will also receive housing benefit and council tax benefit. The 450,000 who have an 81 per cent. withdrawal rate will be at least £11 better off than they are now. Approximately 4 per cent. of people entitled to pension credit, or 150,000 pensioner households, will be subjected to the marginal deduction rate. Such people are entitled to the reward element of pension credit, to receive housing benefit and council tax benefit, and to pay the 10 per cent. income tax rate. Approximately 0.5 per cent. of people entitled to pension credit, or 20,000 pensioner households, may be subject to a marginal deduction rate of about 93 per cent. Such people are entitled to the reward element of pension credit, to receive housing benefit and council 
 tax benefit, and to face a 22 per cent. rate of income tax. In total, therefore, 4.5 per cent. of people entitled to pension credit may face a marginal deduction rate of slightly more than 91 per cent. 
 The arrangements that will be in place for monitoring pension credit will provide Parliament with a comprehensive assessment of the impact of pension credit on pensioners. Those monitoring arrangements are still being developed. Arrangements will be in place to provide robust information on pension credit recipients. We intend that the Department will publish data from its administrative records on those and other groups quarterly. Information on the total incomes of each group is currently not published quarterly, although the average benefit payment is. The intention is that such information will continue to be available on request. 
 The Government are committed to monitoring and subsequently evaluating pension credit, and we have taken steps to ensure that effective arrangements will be in place. I assure hon. Members that the results will be reported, as is the case for existing social security benefits. 
 Although the amendment is unnecessary, given that it was tabled in order, rightly, to ensure transparency, I shall make an offer to the hon. Member for Daventry (Mr. Boswell), who speaks on behalf of the official Opposition. When we are putting the arrangements in place with officials, I could arrange meetings with our officials to discuss the arrangements so that he is clear and understands the work being done to ensure that the monitoring facility will be effective. 
 Before I speak to amendment No. 5, I shall respond to several points that have been raised. I hope that my doing so will give a clearer understanding of my detailed response to amendment No. 5. As I said, I do not intend to take any cheap shots at the hon. Member for Northavon, who is not present, but I shall respond to some of his points factually and give full answers to his questions. 
 There are 1.4 million pensioners who have less than a full basic state pension and deficiencies in their national insurance contributions. A lack of administration data makes projections for pension credit difficult, but about 14 per cent. of minimum income guarantee claimants, or 266,000, have less than a full basic state pension. Of the 5.5 million who will be entitled to pension credit, about 13 per cent. will have a deficient record. Some 164,000 women, mostly aged between 60 and 70, have a deficient record, but it is difficult to quantify how many of those have a deficiency because of a lack of home responsibilities protection, as that information was not available prior to 1978. 
 Amendment No. 5 would deem a notional amount of basic retirement pension for the purpose of saving credit calculation as though home responsibilities protection had been retrospectively awarded to all pensioners. To enlighten the Committee, home responsibilities protection has been available since 
 1978. It covers people who have, for complete tax years, been awarded child benefit for a child under 16 or have cared for more than 35 hours for people with prescribed disability benefits. It is one of the major changes made to increase the capacity for people to earn a basic state pension. It is interesting that all the major changes since the creation of the basic state pension in the late 1940s came from Labour Governments. That is an important historical fact. Home responsibilities protection is an important step that was taken by a Labour Government; so, too, is the state earnings-related pension scheme and the new pension credit. Three generations of Labour Governments have attempted to expand the opportunities for people to gain access to income in retirement, and to deal with the difficulties caused by the record of the Conservative Government. 
 The protection offers a reduction in the number of qualifying years needed for a full basic pension. For instance, a woman needs 39 qualifying years of contributions or credits for a full pension. Every year of the protection reduces that number. There is, of course, a cut-off; home responsibilities protection cannot reduce the number of qualifying years below 20. 
 The amendment proposes that we apply the conditions of entitlement for home responsibilities protection to people who would have been covered had the legislation existed before 1978. By my reckoning, we would have to recreate those conditions way back to the 1920s in some cases. The protection hangs on prescribed social security benefits, some of which did not exist in 1978, or existed in other forms. We would have to try to simulate the caring situation to see if it looked like the 1978 criteria. That may have been a credible but daunting proposition in 1978, but it is not credible now. It simply is not practical. 
 I understand what the hon. Member for Northavon was trying to do, but in reality, it falls down, and is impossible to implement. For the future, the state second pension will ensure that the groups that are of concern receive much better treatment than was set out in the 1976 legislation.

Tim Boswell: Is there not real concern that, notwithstanding the more generous treatment under the state second pension, there will be plenty of people who attain only the current or projected level of the minimum income guarantee? They may not benefit at all.

Ian McCartney: The purpose of having two parts to the legislation is to ensure that those who were wronged or left out previously and have insufficient records will get the minimum income guarantee part of it. Without that, they would be deficient by considerable sums. We have not left them out—far from it. We can consider the minimum income guarantee as a catch-all measure, under which we do not have to find out who all those people are. Those people do not have to construct a case to prove that they were carers for more than 35 hours a week, and we do not have to work out a simulation test to find out whether they had appropriate caring responsibilities. It would be a nightmare for an
 elderly person to have to do that now, when we could just give them the minimum income guarantee. However, we are concerned about what else we can do.
 The guarantee credit, which is a vital part of the Bill, ensures that those who are washed out because of the past are now afforded security in retirement. The guarantee level is significantly above the level that pensioners received before 1997. It is not just a guaranteed level; it is a new guaranteed level. 
 On 13 March, my right hon. Friend the Secretary of State said in evidence to the pension credit inquiry of the Select Committee on Work and Pensions that the pension credit continues to be a basic feature of the contributory scheme. On the issue of deficient records, he said that the problem would reduce as women build up their own pension entitlements. He was then asked about the conflict between that and pensioner poverty, and he replied that the second state pension deals with poverty for periods in which people cannot contribute and the savings credit provides the reward. That shows an interrelationship in the modernisation of state pension provision. 
 Concerns have been raised throughout the passage of the Bill about people whose national insurance records fall short because the protection that is now available for carers, for example, has not always been there. We believe that instead of trying to right the wrongs of the past in what would be a complex and impossible way, the critical thing is to ensure that something is done quickly. That is why we introduced the minimum income guarantee and the state second pension. Those who have lost out for many years should at least be afforded a decent income in retirement. 
 I understand what my hon. Friend the Member for Stalybridge and Hyde (James Purnell) was trying to do in his intervention. We appreciate the work that foster carers do and sympathise with those who, having chosen to be full-time carers, receive poorer pensions as a result. Home responsibilities protection in respect of carers of children is awarded through entitlement to child benefit. Foster parents do not receive child benefit directly and have consequently not been covered by home responsibilities protection. We estimate that of the 37,000 foster carers in Britain, approximately 7,000 could benefit from an extension of that protection. 
 We have discussed with local authorities and other interested organisations, including those that represent carers, whether it is possible to improve the position of foster carers. We are satisfied that improvements could be made without the need for primary legislation. We are reviewing the arrangements and, should we decide that a change in legislation is required, the proper place in which to fix the problem is in the Social Security Contributions and Benefits Act 1992, which deals with legislation for home responsibilities protection. 
 I can offer my hon. Friend a meeting in the near future to discuss the issue of foster carers, about which he has also written to me. We intend to work with officials to see whether anything can genuinely be 
 done. I do not wish to over-egg the pudding and suggest with nods and winks that a solution is just around the corner; I am telling him openly and honestly that this is another issue that I looked at when I first became a Minister, and I decided that something must be done. We are reviewing the matter. I cannot say any more, but I hope that hon. Members will understand that I recognise the problem and that it must be resolved in an effective way—[Interruption.] 
James Purnell (Stalybridge and Hyde) rose—

Ian McCartney: Does the hon. Member for Daventry wish to intervene?

Tim Boswell: No.

Ian McCartney: I give way to my hon. Friend the hon. Member for Stalybridge and Hyde.

James Purnell: I thank my right hon. Friend for his assurances and will take up his offer of a meeting. I hope that he will forgive me if I disappear half way through his speech, because I am already in hot water for doing the same thing in the main Chamber.

Ian McCartney: It is quite all right for my hon. Friend to disappear, because I had come to the end of my remarks.

Tim Boswell: In view of the extremely valuable contribution made by the hon. Member for Stalybridge and Hyde, I thought it only appropriate to give him first crack at the Minister in response to that extremely welcome announcement. This is a genuine question because I have not checked and do not know the answer: what happens to child benefit at present if it does not go to the foster carer? Does the money go to someone else, into a type of black hole, or is it accounted to the local authority en bloc?

Ian McCartney: That is a very good question.

Win Griffiths: Order. The matter is not strictly within the confines of the debate, although it may be later on.

Ian McCartney: The benefit goes to the local authority.
 I have tried to be open and honest about the difficulties that we face. I hope that my remarks were helpful and that the hon. Member for Daventry feels able to withdraw the amendment.

Tim Boswell: I am genuinely grateful to the Minister for his response. He was positive in relation to foster carers and I do not wish to trap him, but some of the detail needs to be considered and I wish him good speed in that. Should he keep us in touch with developments, I am sure that we would wish to give a fair wind to any improvements that can be made, especially if they are modest in cost.
 The hon. Member for Stalybridge and Hyde unwittingly but charmingly revealed some of the difficulties of the debate, because when I looked up at the monitor I realised that Conservative Members have created what is probably an unprecedented situation; my hon. Friend the Member for Havant (Mr. Willetts) is speaking in the Chamber, my hon. Friend the Member for Hertsmere is participating in a debate on the social fund and I am trying to deal with this Committee. Therefore, we are splitting our forces, 
 but I make no complaint about that. Credit should also be given to the hon. Member for Northavon: he has been associated with these amendments, but he cannot be here for the same reason. It might be a tribute to the Minister's Department, or to the importance of the subject—or to both—that we are all rushing around discussing social security this afternoon. 
 The Minister's responses have been helpful. I especially thank him for his offer to discuss how the mechanism for publicising how this is to work, and the accountability of the mechanism and its likely effects, can best be explained to the general public—if the Minister is setting out to do that. On occasion, I have been very pleased that he has been able to do that in other respects, for instance with regard to the Pension Service, so I am sure that we shall take him up on that offer. A dialogue with hon. Members will be constructive for his Department and for us. 
 I am also conscious of a personal difficulty: I was not present to hear my hon. Friend the Member for Hertsmere move the amendment. All hon. Members will be aware that constituency crises occasionally occur: a son of a constituent of mine is in prison abroad, and I had to deal urgently with that. However, my hon. Friend was right to raise the issue. The hon. Member for Northavon supplemented it with his own concerns, and the Minister gave a full response. These are complex issues that do not yield to a momentary soundbite or 10 seconds' consideration. 
 As I said, the amendment was moved by my hon. Friend. Had I moved it, I would seek the leave of the Committee to withdraw it, but, as the Minister will be aware, for procedural reasons, I cannot withdraw it because I did not move it. However, if the Minister were to negative it, on the assumption that we might take it away, reflect on it and return to it on a future occasion—or, rather, on the tacit assumption that that will be the case, as he cannot guarantee that—I would be happy to sit down and let the Committee take its course. 
 Amendment negatived.

Tim Boswell: I beg to move amendment No. 25, in page 3, line 25, leave out subsection (6).
 I think that we will now make some progress. The exchanges that have taken place on this clause have revealed some of our underlying concerns about it and the way that it operates, and as it is, in a sense, the central motor for the Bill, they will feature here and throughout our consideration—although we shall, of course, always be bearing in mind the relevance of what we have to do. 
 This is an overtly probing amendment. In response to it, I am sure that the Minister will want to say something about how he is going to approach the question of income, and we shall have some detailed points to make at a later stage. The amendment proposes to exclude subsection (6). That would make it impossible for him to produce regulations about what should and should not be treated as qualifying income. At a later stage, I am sure that we will want to 
 talk about capital assessments, implied incomes and so forth—in much the same way that my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) and I briefly touched on such matters this morning. 
 There is also the entire question of earnings, and the frequency with which that plays into assessments, for example, particularly if they fluctuate, which will create problems. Anything else, including tax-sheltered incomes, such as tax-exempt special savings accounts and individual savings accounts, may or may not enter the equation. 
 I told the Minister that the amendment is probing and, in that sense, I do not want it to be agreed to because there clearly must be regulations. However, the Committee would be helped by an explanation of how he sees things panning out. Will he give us at least a foretaste or a trailer of the definitions of income, which we might consider later in Committee or on Report? 
 I make one or two points of general application. We are trying, when possible, to be equitable to different sources of income—that is not necessarily wrong. I understand the distinction between savings incomes and earnings incomes for older people, but, given that we are discussing a savings credit, as a broad principle, one would expect savings incomes to be treated in the same way irrespective of their source. That reflects a general worry that if older people saved to get an income from capital or if they bought a house to let—that is becoming rather fashionable—such income should be treated on all fours with the annuity income that they would otherwise receive from a private pension. 
 There is also a general principle, which is lesser but nevertheless relevant, that income from different sources should be handled in the same way. We will examine the assessment period later, and there will be provision to allow the decision maker who decides the level of pension credit to take a view on what is likely to happen. If the income is likely to change radically, a lower period than the five years that the Minister normally wants may be used. We want the provision to be broadly neutral between different types of income so that an accident would not propel a person into a comparatively unfair assessment. I am sure that the Minister wants that too. 
 I shall give an example. I recall a case of constituents who were left a piece of property in a will. A condition of the will was an obligation to make over the income arising from rental to a third party during the third party's lifetime. I have not come across such an arrangement before, but I am sure that it is well precedented. Although I have not looked up the file, I recall that there was awful difficulty with social security benefit because my constituents were deemed to have an income. The social security doctrine had difficulty dealing with the fact that they were obliged to pay out the income. 
 It would help the Committee if the Minister told us more about the form of the regulations and the broad criteria for dealing with the matter. We have received a taster from the Secretary of State about earnings. The 
 Minister will note that owing to the temporary retirement of the hon. Member for Northavon, we shall not discuss amendment No. 4, which he tabled, or my amendment to that amendment. The amendments are about the treatment of earnings. Did the Secretary of State mean to imply that all earnings will be left out or that they will be included in some way? If we are on a level playing field and people earn substantial amounts of money, that might be knocked off against their pension credit. However, if they had received a five-year assessment and acquired the earnings later, that would not occur. 
 I have outlined considerations of consequence and practice, and it would be useful for the Minister to fill us in and respond to my points.

Andrew Selous: I shall speak briefly about earnings. The Minister will know of the recommendations made by the Select Committee on Work and Pensions in paragraph 42 of its report. It recommended that the first £40 of all weekly earnings should be disregarded when calculating pension credit.
 This generation of pensioners is healthier than previous generations, and many pensioners wish to continue in the labour force, perhaps in part-time jobs. Pensioners who live alone find that the opportunity to get out of their houses to be with former work colleagues is extremely valuable. Age Concern made that point when it gave evidence to the Select Committee, and all members of this Committee probably received an e-mail from Age Concern yesterday asking for that point to be raised today. I shall be interested to hear the Minister's response on that.

Ian McCartney: I see the amendment as a scene-setter for a more substantive discussion on clauses 15 and 16. I shall try to paint a broad picture, and a more detailed discussion of Opposition Members' contributions may be best dealt with during our consideration of those clauses.
 Although the amendment appears to be a draconian attempt to blow a hole in the Bill below the water line, I accept that that is not the intention of the hon. Member for Daventry. He has floated several ideas to see what comes back from the fishing expedition. 
 Subsection (2)(a) shows that entitlement to savings credit is based on a claimant's qualifying income. Subsection (4) shows that the calculation of the savings credit is also based on the amount of a claimant's qualifying income. If the amendment were accepted, without removing the word ''qualifying'' from subsections (2) and (4), we would be left with a calculation without a definition of the terms on which it is based. In effect, no one would be rewarded for thrift—the hon. Member for Daventry said that he did not intend for that to happen. 
 The concept of a qualifying income is important to both the working of the savings credit and the principles behind it. We want to reward specifically people who put away money to provide for retirement. Many people have to take difficult decisions when 
 finding money to put into second pensions and general savings. We also want to reward people who continue to work after pension age. 
 We intend to prescribe qualifying income as all income defined in the Bill as retirement pension income, which is mentioned in clause 16, in addition to income from capital, annuities and earnings, which is defined in regulations under clause 15. Those income streams represent either a pensioner's savings during their working lives or, in the case of earnings, a pensioner's continuing contribution to, and participation in, the work force. 
 We do not think that it is right that some elements of income are rewarding. We would not want pensioners to be rewarded for their earnings through the new working tax credit. It would be absurd for that income to reward pension credit—it would be a credit on top of a credit. Similarly, if a pensioner had a younger partner in receipt of incapacity benefit, we would not want to reward that benefit—that would be bizarre. 
 I shall paint in the field, and give an extensive, but not exhaustive, list of items that will not be treated as income or that will be treated as income and totally ignored—they will not be defined as income under the Bill. The list includes: attendance allowance, disability allowance, and similar elements of war pensions; payments in respect of dependant children, including integrated child credit, and any other income or capital of those children; rent from second properties, as capital value is taken into account; actual income generated by a person's capital, as we take notional income into account; payments from local authorities, where persons provide foster or respite care; payments from the independent living fund, the Macfarlane or Eileen trusts, and community care direct payments. Other items that we are proposing to disregard also include cash in lieu of concessionary coal, voluntary payments from relatives and charitable payments—which the voluntary sector will be pleased to hear.

Tim Boswell: It is useful to have this list. I am not trying to trap the Minister—I might just have misheard—but did he say that if there is income from compensation funds paid to, for example, a person who was injured in childhood and still has the capital, that that income will be included? I think that that is at least a possibility, and he might wish to write to me on that subject.

Ian McCartney: I referred to the Macfarlane and Eileen trusts and the independent living fund. I also said that it was not an exhaustive list, and that I am still considering adding to it, so I could include compensation arrangements. I know that the hon. Gentleman is not trying to trap me, but I hope that he can see that we are trying to make this as extensive an operation as possible to ensure that the widest possible notion of income can be disregarded to maximise the potential for people to get access to the credit.
 Income is relevant to the guarantee calculation; for single people, the top up is £100, and for couples the sum is £154. There might be other obscure forms of income that I have not yet come across but, in this business, we learn something every day. That is why 
 we have given ourselves powers to add to the list under clause 15 (1). Again, I will give examples of what we are talking about: regular payments from United Kingdom occupational and personal pension schemes, and their foreign equivalents; payments from retirement annuity contracts; annuity income funded from other sources, for example from a home income plan or where a similar or associated loan is secured on a person's home that will be offset with regard to the interest that the person has to pay on that loan; assumed income from capital, so that actual income from capital will be ignored, but income at £1 per week for each £500 or part thereof will be assumed, based on the total value of the capital assets of the claimant and their partner in excess of £6,000—or £10,000 in residential care cases. 
 The value of some types of capital assets, notably the person's home and personal possessions, will be ignored. We have done it that way because, in the consultation, older people's organisations overwhelmingly supported assumed income in the way that I have described. That is important, because we want older people to understand how the system works. 
 The current minimum income guarantee disregards will be carried forward into pension credit: single pensioners will receive a £5 disregard, couples a £10 disregard, and a £20 disregard will apply in other prescribed cases. People who are currently entitled to higher disregard will continue to receive it. Earnings that are disregarded will not be taken into account in a guarantee credit assessment. War disablement and war widows' and widowers' pensions, and the whole of any war widows' supplementary pension—which is paid in addition to the normal pension to certain pre–1973 war widows—will be ignored, as will the first £10 of other war pensions, including foreign war disablement and war widows' and widowers' pensions. With regard to matrimonial maintenance payments, working tax credit, employers' sick pay, and the Nazi persecution pensions paid by the German and Austrian Governments, the first £10 will be ignored. Rent from lodgers, boarders or sub-tenants will also be included in the calculation of the guarantee. 
 Qualified income is defined in clause 3(6). That relates to calculations for the awards. The relevant sum for single people is £13.80, and for couples it is £18.60. Other income is also relevant: regular payments from United Kingdom occupational and personal pension schemes, and from their foreign equivalents; payments from retirement and annuity contracts; annuity income funded from other sources; assumed income from capital; earnings; the current disregards that I have set out and retirement pension and any foreign equivalents, including the 25p age addition; graduated pension; age addition; SERPS, including a notional amount for a retired pension for those who have deferred their retired pension. In addition, amounts paid in respect of children will be disregarded. 
 I hope that hon. Members can understand how much work is going into putting the framework 
 together to maximise both the opportunity for the minimum guarantee and the reward element. Certainly, there are difficult issues. Hon. Members raised some that might be better debated under clauses 15 and 16. I hope that that information will give them an idea of how the Government intend to deal with the issue of maximising the uptake of pension credit.

Tim Boswell: I am grateful to the Minister, because he has elucidated some of the Government's thinking. He has provided a list that will help not only members of the Committee but organisations that represent older people to think of possible gaps such as those that he identified. I was pleased that he expressed a willingness to keep an open mind as to whether other categories of income might come under that list. He also said that we will have time in our considerations of the Bill, let alone before subsequent regulations are made available, to discuss whether certain kinds of income should be included, and how they should be treated if they are.
 The Minister is right to say that it would be appropriate to talk about income and earnings, subjects to which he will want to return, under clauses 15 and 16. I was not proposing to belabour the point on the amendment. I thank him for what he has said so far, and express qualified satisfaction with that. Although there are matters to which we must later return, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

Tim Boswell: I beg to move amendment No. 23, in page 3, line 33, leave out subsection (8).

Ian McCartney: On a point of order, Mr. Griffiths. I do not wish to complicate things, but will you explain what will happen to the amendments that have been withdrawn? I am mindful of ensuring that hon. Members do not lose the opportunity to discuss those issues because of today's difficulties.

Win Griffiths: As far as I understand it, the issue in question could probably be raised elsewhere in the Committee's scrutiny of the Bill. There will be sufficient time for new amendments to be tabled.

Tim Boswell: I should like to respond—obliquely—to the Minister's point. In the words of General MacArthur, I will return. The Committee needs to return to those issues, and we will have to put our thinking caps on about how best to do it. I welcome the Minister's good will in saying that we should talk about them.
 Superficially, amendment No. 23 is a bit like amendment No. 25, but it has a different and more limited effect. It would formally exclude regulations giving 
''descriptions of persons in whose case the maximum savings credit shall be taken to be nil.''
 Unless I have completely misunderstood the Bill and the explanatory notes, and have failed to attend to our discussions on amendment No. 14, with which we started the day, subsection (8) is about members of enclosed religious orders and prisoners. 
Mr. McCartney indicated assent.
 Mr. Boswell: The Minister is nodding. I am relieved, because that is what I thought it was about. My first task in speaking to this probing amendment is to ask him to confirm formally and for the record that those are the persons that he has in mind.
 I puzzled over the difference between clauses 2(6) and 3(8) without reaching any conclusion on whether it has significance, or whether it is merely necessary in order to facilitate the slightly different structures of the guarantee credit under clause 2 and the savings credit under clause 3, which we are now discussing. If the Minister refers back to this morning's debate, he will find that clause 2(6), which we wanted to delete and which relates to the same matter, is in a rather different form from the provision that amendment No. 23 would delete. In one case, the suggestion is that a prescribed amount under the guarantee should be set at a lower level, while in the other, it is that the savings credit—the product of the calculation, rather than the condition for it—should be nil. It would be useful for the Committee to find out whether there is a rationale for the slightly different approach. There may be, but the Minister might care to reflect on that. 
 My second point relates to a point that we may want to make later in discussing eligibility and assessment periods. Almost by definition, the position of a prisoner is different from that of a person in an enclosed order. I understand that their treatment may be the same under the regulations, but in one case we are, I hope, dealing with volunteers, with the assumption that people who adopt the contemplative life will want to stay in their order indefinitely—although, of course, some do leave. In the other case, it is assumed that people are detained not at their pleasure but at Her Majesty's, by way of a custodial sentence. 
 I am not sure whether the issue has emerged from this Committee, but it does emerge from time to time. From time to time I am not unsympathetic to prisoners' interests. It would be in the common interest of the Committee to ensure that people get up and running as soon as possible after their incarceration, as we want them to be successful and useful members of society. 
 I realise that it is rather an extreme case of the double provision rule that if someone is inside, they should not receive pension credit. That is perfectly reasonable. However, as and when they come out, it is especially important that they should quickly be able to receive anything to which they are entitled. 
 In the past, I have asked the Minister's colleagues in the Home Office about the growing number of older prisoners in our prisons. I have not checked the figure, but I believe that there are more 4,000 pensioner prisoners. They need special attention and provision in the case of health care, for example. It would clearly be inappropriate to debate that today, but if they have an entitlement to state pension credit, they should be able to assume or resume it as soon as possible. 
 That matter is relevant to the assessment period, which we shall discuss later in other contexts, when we debate subsequent clauses. I am not clear what would 
 happen in the case of an assessment covering a five-year period. If the person involved subsequently goes to prison—the example that we are considering in the amendment—and is inside for, say, 18 months, they may return within the original assessment period. I am anxious to determine not whether they should be paid credit while they are inside, but whether they should be paid on the basis of the original assessment when they regain their liberty. Is it a fresh start in every sense? Is there a reassessment? Is there discontinuity in the assessment period, or is it treated as continuous with a little local difficulty being remunerated at nil for the weeks of incarceration? That is more than a trivial issue. It will centre on some other issues, too.

Ian McCartney: It is probably best to deal with that now. I would call that a change of circumstances. The person's income would cease from the point of conviction and incarceration. When they are ultimately allowed out, having completed their sentence in whatever forum, they will make a fresh application. That will not be unusual, because, under the Bill, changes in circumstances must be notified and that can affect either negatively or positively people's access to pension credit. It is simply another category.

Tim Boswell: I remember from my days when I knew a little about agricultural tenancy that there were the so-called seven deadly sins if one was a tenant, the most deadly of which in both senses was to die during the tenancy because it was then impossible for the tenancy to continue in that form. Other sins were bankruptcy and so on.

Ian McCartney: That was called penury.

Tim Boswell: It is not too good in farming at the moment either.
 The Minister said that such matters would constitute a change in circumstance. Whether the change would be notified by the prison authorities or the individual concerned is perhaps a matter for regulation, and a person would start again when released from prison. We could create many interesting scenarios about the proceeds of crime that had not been picked up and confiscated—I am neither advocating that nor entertaining it, but such an elucidation is interesting because the pensioner's income may have changed during prison, perhaps because, for example, he had received a substantial windfall from an auntie. 
 Because of the nature of the change of circumstances or the interruption, a flow of pension credit that would have been payable from day one for five years on an assessment would have to be reassessed and may give rise to a lower form of income thereafter. That constitutes not double provision, but double penalty. The right hon. Gentleman may want to reflect, not necessarily now—we are at the edge of determining the matter—whether he wants such an outcome. 
 It was not a waste of time to table the amendment. We are worried about targeting, although the explanatory notes confirm that the measure concerns enclosed orders for prisoners. We are worried about the operation of a change of circumstances and whether it is straightforward, which gives rise to an 
 apparent inequity between periods before or after incarceration. I hope that the Minister can respond to the issue now or reflect on it later.

Ian McCartney: The purpose of the subsection, along with clause 2(6) and (9), is to provide powers to ensure that prisoners and members of a religious order who are fully maintained by their order can be excluded from entitlement to pension credit. That is because the cost of maintaining those groups is met by other organisations.
 The hon. Member for Daventry asked about the relationship between clause 3 and clause 2. I have received expert advice that clause 2(9) allows the amount for monks and nuns to be set at nil. Clause 2(6) covers hospital in-patients and also has links with clause 2(8). I am pleased that the experts are on my side and not on the hon. Gentleman's side. I do not mean that in the pejorative sense because I understand the complexities of this part of the Bill. Get lawyers involved, and clause 3 will result. 
 The proposed treatment of prisoners in respect of pension credit is consistent with the approach taken in relation to income support and other benefits. For example, prisoners are excluded from the working families and disabled person's tax credits and attendance allowance, and the basic state pension payment is suspended for the duration of the sentence. The amendment would remove the proposed power to prescribe cases in which the savings credit will be set at nil. It would mean that prisoners and members of religious orders who were fully maintained by their order would be eligible for savings credit on the same basis as other pensioners. 
 I know that the hon. Gentleman is not serious about paying savings credit to pensioners, although he became pretty close to that in his closing remarks. The needs of men and women in prison are met by the Home Office and the Prison Service. Extending the savings credit to prisoners would amount to double provision. 
 People in enclosed orders do not need state support because their needs are met by other organisations. Indeed, the state has no legitimate role in their financial affairs. Extending the savings credit to such people would inevitably involve making inquiries into their financial affairs. The provisions uphold tenets that have been the policy of Governments of both political persuasions since the establishment of the welfare state. I assure the hon. Gentleman that the exclusions are not in breach of our obligations under the European convention on human rights. It is the underpinning ethos of religious orders that there is no need for state support and there is no legitimate role for the state in the financial affairs of those committed to such a way of life. 
 When people on pension credit are imprisoned, their partners can claim as single people. When prisoners are detained in custody awaiting trial, any housing costs and payments, including housing benefit, will continue to be paid for a maximum of 52 weeks. I hope that those remarks will also reassure 
 the hon. Gentleman in respect of other matters relating to prisoners' needs on sentence or pre-sentence.

Tim Boswell: I am grateful to the Minister. It is useful to have elucidation, although I am not absolutely sure that it is right in relation to what could be the downrating of an entitlement after a period of incarceration. I believe that we are removing double provision at the possible expense of creating double penalty, although that is perhaps how the prisoner would see it. In no sense do we intend to produce a special regime for prisoners. We simply wish to comment on the fact that had they not been in prison paying their dues to society—

Ian McCartney: This is not double jeopardy. Whether people are in prison or not is irrelevant because a fresh application is made, the resolution of which will be determined by the circumstances. It is a fresh application because their qualification has been suspended. They have been found guilty of a criminal act and imprisoned. At that point, their qualification and right to credit ceases and can only recommence when they come out of prison. When they are out of prison, their record is irrelevant to the decision-making process on pension credit. Their financial circumstances will determine the level of minimum income guarantee and whether any credits should be paid in reward.

Tim Boswell: It will not assist the Committee to have a huge and disproportionate spat, but the Minister may not have helped by using the word ''suspended''. The essence of his case is that there was an entitlement that stopped on incarceration. A new entitlement is available after incarceration that will be determined by the circumstances involved. I do not think that that is a distortion, but I cannot argue that it is a coherent and logical position. The entitlement undergoes a suspension rather than a cessation followed by a recommencement or fresh assessment—a fresh start.
 I simply record that if one took two persons who started with the same entitlement to pension credit on a particular day, and whose assessment periods were conventionally set at five years each, one of them may, in the interim, have had an accession of resources—perfectly legitimate ones, not the proceeds of crime. They may both, coincidentally, have had the same accession of resources; but if one of the two had gone to prison, that person would find themselves, willy-nilly, obliged to start again. Having examined the procedure for the assessment period, I imagine that relatively few people would go to the Department and say, ''We think that we have come into a fortune and don't want the pension credit and we would like to be reassessed'', with the inference that they go back to zero. However, the person who has been incarcerated would be forced to do that.

Kevin Brennan: Is not the point that people incarcerated in prison have disqualified themselves from the benefit in the meantime? The idea that those people should be entitled to the same treatment as those who have not disqualified themselves is absurd.

Tim Boswell: That is an interesting point. The hon. Gentleman is giving what many of us might feel is the moral case for that disqualification. I am feeling after issues of law, although I do so as a lay person rather than a lawyer. If two people were under the same regime—unless and until they wished to make an application for a fresh assessment—and one of them was imprisoned, the latter would have the by-product of losing some of his or her entitlement without any other change in circumstances. The Committee should at least pause on that.
 I do not wish that point to be understood as an argument for some sort of outdoor relief for those who commit crimes, and in fairness the Minister has not caricatured it that way. I am just saying that it is an interesting point. That is the kind of detail that needs attention. We must decide whether it is the suspension of a benefit that applies elsewhere or a fresh start brought about by the criminal's fault and the fact that he or she went to prison, as the hon. Gentleman perfectly reasonably says. I do not want to labour the point, but it has at least been useful to draw out those issues. Some of them may require a little attention before the final regulations, and there is time enough for that.

Andrew Selous: My hon. Friend's points have some relevance. It is important that when people come out from prison they have minimal reason to re-offend. It will surely be conducive to staying on the straight and narrow if they have benefit entitlement as soon as they come out from prison.

Tim Boswell: I accept that, but equally I take it as self-evident that the arrangements for discharge from prison will enable them to pick up any benefit entitlement as rapidly as possible. We have spent quite a lot of time on the issue. It is a small one, but sometimes it is the small ones—the grit in the shoe—that niggle. We were right to raise it, but I do not wish to persist with it, and I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Tim Boswell: We have been talking in detail about a very small proportion of the total pension credit fund. As we let the clause go on its way, it will not escape the Committee that, for reasons that we have already discussed, we are somewhat attenuated this afternoon. I hope that we will conduct a sensible discussion on the clause. As well as the little exchanges that we have just had, we have heard valuable assurances from the Government on the approach to income, partial contribution records, cases in which people are not entitled to the full basic pension and making up the full amount.
 In a sense, this is the central clause of the Bill. It has generated many issues, but for a variety of reasons they have not yet all been fully squeezed out. They are perfectly sensible issues that need not necessarily generate huge political controversy, but it is important that a Government mindful of human 
 rights obligations and what is fair both to all pensioners and between pensioners should reflect on them. I simply put down a marker for later debates on those subjects. Although we have had a good rattle through the greater part of today's considerations, we have not yet quite got to the end of the story.

Ian McCartney: I do not wish to detain the Committee much longer. Clause 3 is a key building block of the Bill, and as a consequence it is a significantly detailed part of it. Not many amendments were tabled but despite that, and because of the Chairman's tolerance, we have had a wide-ranging debate on the concepts and principles of the clause. The clause has enabled my hon. Friend the Under-Secretary and me to be completely open and frank, and will allow us to lead debate on further subjects under clauses 15, 16 and beyond, so that Members are clear about them. We have provided a further written note on clause 3, to help hon. Members with regard to clauses 15 and 16.
 Although not many hon. Members have taken part in our discussion, it has been a quality debate. I am pleased that we have reached clause 3, and I hope that it will remain in the Bill because many pensioners and pensioners' organisations have been waiting a generation for its provisions. 
 The Bill will end poverty, give people assurances about their security in old age and for the first time ever it will provide a reward for savings and small second private pensions. This has been a long time coming. Some of us have been campaigning for it for generations, but I am pleased that, at 3.35 pm today, we have finally achieved it. I look forward to moving on to clause 4—and beyond. 
 Question put and agreed to. 
 Clause 3 ordered to stand part of the Bill.

Clause 4 - Exclusions

Tim Boswell: I beg to move amendment No. 27, in page 3, line 38, at end insert
'and in the event of a difference of opinion between those parties to that couple, then that person with an income profile likely to give rise to the higher amount of pension credit shall be deemed to be the claimant'.
 I do not know whether antiquarians who are still on the Labour Benches remember clause four—I hope that they do—but I always feel an almost irresistible urge when I see—

Ian McCartney: My hon. Friend the Member for Dagenham (Jon Cruddas) wrote it.

Tim Boswell: It would concern me even more if the hon. Member for Dagenham still believed in it, because his leader does not. If we continued along these lines I think that you, Mr. Griffiths, would feel that we were being tempted. I intended merely to make the jocular remark that whenever I see a clause 4, I feel the urge to amend it.
 I have no major conceptual problem with this clause. I am not about to suggest that the red hordes are going to march down Whitehall, or anything like that—indeed, perish the thought, with the present 
 Government. However, we can, perhaps, leave that topic to another day. 
 I wish to raise two serious issues that will arise with regard to different amendments. Such issues sometimes arise when one is addressing apparently simple and technical clauses, such as this one. I sometimes think about such matters in the small hours of the night. I hope that Committee members will not think that I spend all of the small hours reflecting on the State Pension Credit Bill, but occasionally one wakes up—after a nightmare, for example—and thinks about something that one had not thought about before. 
 As I have said, there are a couple of serious issues, particularly with regard to this amendment, that deserve a little bit of the Committee's time. The concept of the clause is not silly. Its primary aim is to prevent the payment of more than one pension credit to a benefit unit. I do not think that we will argue about that at all; it is clear that that will happen. 
 However, I should perhaps add that there is a wider issue here, which I have been concerned about. Following the advances that were made by the previous Conservative Government in the sphere of independent taxation—although I know that the Minister of State does not always feel that advances have ever been made by any of his political opponents—this measure begins to row us back towards a world in which people are seen and treated as one unit for the purpose of their income, bearing in mind that this is an income-related benefit. I record that but I will not necessarily debate it further, as that is the decision that the Government have made. 
 With regard to the purpose of amendment No. 27, two things need to be discussed. First, what is a couple? That came in for some comments from Help the Aged. I assume that a couple are usually—but, perhaps, not exclusively—two people of different sexes who are either married or cohabiting, and are therefore treated as a single benefit unit—to use the term of art—and that those would be the people who would be entitled to a single pension credit. However, Help the Aged makes a rather terse comment in relation to clause 2, which also applies here: 
''Married/unmarried couples is always good for domestic tension. Will (say) two older sisters living in one household be two singles or one couple?''
 My understanding is that they will be two singles, but it is important that the Minister of State should explain that.

Ian McCartney: Yes.

Tim Boswell: I think that the Minister of State is giving me an affirmative answer to that, but I will let him do that formally, because that is important.
 I have tried, in my rather lay way, to describe the single benefit unit. Perhaps the Minister will tease that out further. We assume that there is such a thing, and that it is broadly a married couple or an unmarried couple, as it is described in the clause. Potentially, and increasingly in reality, both may be entitled to a state retirement pension. A couple who are not exactly the 
 same age who retire at, say, 65 in the case of the man, and, say, 62 in the case of the woman, may now find that they both have a retirement pension in their own right. Elsewhere, the Bill refers to a person or their partner reaching retirement age. The amendment is designed to pave a discussion and tease out rather more closely how the provision will apply and how the decision-maker will determine the matter in cases that are consensual and involve both parties and in which there is some tension or people simply like things their own way. 
 By definition, if one member of a couple is of pensionable age and the other is not, the one who is of pensionable age will be the only one in receipt of a state retirement pension, and the pension credit will hang on them. What happens when the second person reaches pensionable age and might also be entitled to a retirement pension? Clearly, there cannot be two pension credits. Is provision made for one to take over from the other, and if so, how will that be affected? Will it require a claim by the second party, or indeed, renunciation by the first? Will the initiative come from the Benefits Agency or the individual claimant? When they cannot decide how the matter is to be dealt with, how will the matter be decided and to whom will the credit be paid? Can arrangements be made for it to be split? 
 The amendment is intended not to invent a way of increasing the total credit but to deal with complexity. It is possible that both parties might have a full retirement pension and that either might be able to receive credit over and above that. The figures suggest a margin of leeway. I assume that all factors will be taken into account. How will such complicated issues be resolved? Above all, if one party has retired and the other party joins them, and if the assessment is likely to be better for the second party—if that is possible—how will that affect the overall credit? How would the Pension Service carry that into effect?

Ian McCartney: I shall try to give the hon. Gentleman a full explanation and set out the procedures for issues of dispute and how the Department deals with them.
 The hon. Gentleman asks for a definition of ''couple''. That is defined in clause 17, in the case of married and unmarried couples involving different sexes. A same-sex couple is equal to two individuals. He also asked about the total cost, which is £2 billion a year for guarantee credit alone, as the Government set out in publishing the Bill. 
 Amendment No. 27 would specify in primary legislation the criteria that would apply in cases in which the parties cannot agree who should make the claim. It stipulates that such disagreement should be settled by paying pension credit to the person entitled to the higher amount. The issue is similar to one that Lord Higgins raised in another place. As my noble Friend Baroness Hollis said, such cases are so rare that officials have been unable to identify a single case when that has happened—we must keep our fingers crossed. Therefore, we are considering a hypothetical situation. However, various processes are in place that I shall set out and, hopefully, that will reassure the hon. Member for Daventry. 
 Under the minimum income guarantee, if and when such disputes exist, they are settled by the Secretary of State—in effect the local decision maker—by taking account of individual circumstances of the case. We intend to adopt that approach to pension credit, and it might help hon. Members if I take them through the process. 
 In the first instance, responsibility for settling the dispute would return to the couple and they would be given every opportunity to resolve the problem themselves. If a customer indicates on the claim form that their partner does not agree to their making a claim, a letter is sent to both people asking them to decide who should make the claim. Further steps would be taken only if it was clear that they were unable to resolve the dispute, or if a reply to the letter had not been received after 14 days. 
 A range of factors are considered when deciding such a case, such as determining the person who is normally responsible for paying the household bills. Indeed, if it would give a financial advantage for one partner to claim, the partner who would receive the most benefit would be chosen. I think that that answers one of the points made by the hon. Member for Daventry. 
 The amendment would not provide sufficient flexibility to allow the decision maker to take account of the full range of sensitive issues that might arise in individual cases. Indeed, it would reduce the criteria that the decision maker could consider. 
 Furthermore, the approach suggested by the amendment would lead to considerable intrusion into customers' personal resources. It would involve asking detailed questions about the claimant and their partner's income. For example, if income were derived from a joint bank account, potentially arbitrary decisions would have to be taken on the apportionment of that income between the two partners. 
 We know that customers are extremely reluctant to claim benefits that require excessive investigations into their financial arrangements, and we want the pension credit to move away from such an approach. 
 It may help the hon. Member for Daventry if we examine what currently happens in IS and MIG cases. Such situations arise extremely rarely. They may arise from a domestic dispute, or the Department may find against a couple who were effectively living together as husband and wife, and request a joint application. Such cases are more likely to arise under child benefit because national insurance credits are awarded to the claimant under home responsibilities protection, although no statistics are available on that. If a husband and wife reside together and both claim child benefit, the wife has priority over the husband. Under the minimum income guarantee, the decision maker may decide to split payments between each individual of the couple if the claimant mismanages the benefit. That is to protect the best interests of the family, and it generally occurs if the claimant has an alcohol or gambling addiction. 
 The number of such cases is small. Investigations in one office revealed only three split-payment cases out 
 of a case load of about 45,000. The reason for the split payment was mismanagement in all three cases. If a man's claim form indicates that he has a female partner, a further form is issued to both parents to ascertain whether the woman agrees to the claim. In 2001–02, 65,000 such forms were issued. As of March 2002, 95.5 per cent. of claimants were female and 4.5 per cent. were male. 
 To assist the hon. Member for Daventry, my colleagues in the Department and I examined every avenue to assess whether a problem existed and what we could do about it. The problem does not exist; it is perceived. However, even if it did exist, we have robust, effective and humane ways of dealing with it. The situation would be handled in the best interests of the client, rather than the Department. 
 I hope that my answers satisfy the hon. Gentleman and that he will withdraw the amendment.

Tim Boswell: The short answer is that they do, but it is right to raise such issues. The Minister's response was helpful, although we shall study it in greater detail. He has drawn on the collective wisdom and great experience of the Department, and we should refine out the limited cases in which such problems arose. It is our job as legislators to think about extraordinary and odd cases in which what seems to be all right on the surface may not be right behind the scenes, as that is the job of lawyers who draw up wills and other family arrangements. I am sure that the Department will want to look at the issue in a sensible and sensitive way and to try and help wherever possible. My intention was to float concerns, and the Minister has done his level best to answer them. The Committee is making progress and, in that spirit, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Tim Boswell: I beg to move amendment No. 24, in page 3, line 43, leave out subsection (3).
 I hope that this debate will take even less time, because the amendment refers to another point in the exclusion clause. As I have said, that proves no difficulty to us, so I shall not need to return to it in the clause stand part debate. The amendment relates to de minimis payments. I understand why the Department would not want to mess about with tuppence a week. 
 I remember that my mother—a formidable lady who occasionally features in Committee discussions—once received a cheque from the Inland Revenue for tuppence. I communicated with the chairman of the Board of Inland Revenue—otherwise known to viewers of ''University Challenge Revisited'' as one of the New college team of 1964 for which I was consistently the first reserve. I asked, ''Is it really a good idea for your department to be sending out tuppenny cheques?'' He replied that my mother had forgotten to tell officials to roll it forward until the next payment. We all understand that it is absurd and irritating for people to receive piffling amounts. 
 Unless I have completely misconceived the matter, the normal method of payment for savings credit is by bank transfer—we need not debate that now—or by 
 order book in cases in which cash payment has been requested. Payment will be part of the pension and not a separate exercise. 
Mr. Ian McCartney indicated assent.

Tim Boswell: The Minister nods in agreement.
 At the back of my mind, I believe that arrangements can be made for people who have nominal entitlements—to a teacher's pension at the age of 60, for example. In cases involving small amounts, it is possible—and it has been practised in the past—to compound them into a single capital payment. Even if the entitlement were only 10p a week and the assessment period merely five years, I would still be pleased to receive that cheque. Will the Minister tell us the purpose of the provision and how it will work?

Maria Eagle: The hon. Gentleman has shown a full understanding of the de minimis rule, so I will not detain the Committee by explaining exactly what that is in all circumstances. It is a concept that he has discovered partly through family experience, but which is well known in the social security system. It is a way of ensuring that extremely small entitlements—under 10p per week—are not carried through, and that people do not receive cheques for ridiculously small amounts.
 A similar amendment in the other place, which suggested paying the amounts annually, was withdrawn. If there were no de minimis rule, by omitting subsection (3), the hon. Gentleman's amendment would leave us having to pay those small amounts weekly, and the amounts would be even more derisory. His amendment presents more problems than the one tabled in the other place, which at least suggested annual payments. 
 The hon. Gentleman suggested a five-yearly payment. However, it is the income assessment that is five-yearly. Payment is made weekly. For that reason, we still need the de minimis rule. As he knows, we do not simply write off those amounts of money. If the customer concerned is in receipt of any other benefit, we consolidate the small amounts with that. We do not send a separate cheque for under 10p 
 a week, but an additional bit will be added to their other benefit. 
 In practice, the operation of the de minimis rule affects a small number of people. On the assumption of 100 per cent. take-up of pension credit, it is estimated that about 10,000 people will be entitled to less than 10p a week and be caught by the de minimis rule. In 95 per cent. of those cases, we would be able to combine the payment of the pension credit with another benefit. 
 Only about 500 pensioners would be affected. I agree with the hon. Gentleman that to receive a weekly cheque for 1p or 2p from the Department would be severely aggravating to most pensioners. We are talking about a small number of people and a small amount of money. He already understands the de minimis rule and I hope that I have explained why we need to retain it for pension credit. The financial detriment to a small number of people to whom we cannot pass on the tiny amount of pennies will be minor. I hope that the hon. Gentleman will accept that we need the provision and that he will withdraw the amendment.

Tim Boswell: I thank the Under-Secretary for her most persuasive response. It has been useful to rehearse such arguments. It is difficult when people lose out because of the de minimis rule and I accept that the Government do not want that to happen. But a few such cases will arise and I see no way of avoiding the problem, without breaching the concept of the de minimis rule. I am not sure that many pensioners will want to cross the road for tuppence, as it were, or that they would thank the Government if they did so. Given the intimate relationship of pension credit to retirement pension and so on, I still find it difficult to think how such a situation would arise. However, the hon. Lady suggested that there may be some 500 such cases a year. I am grateful for her response. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 4 ordered to stand part of the Bill. 
 Further consideration adjourned.—[Angela Smith.] 
 Adjourned accordingly at four minutes to Four o'clock till Tuesday 23 April at half-past Ten o'clock.